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Samsung Electronics’ profitability last year was significantly lower than that of TSMC and Intel
25.01.2021 [14:14],
Alexey Razin

South Korean giant Samsung Electronics regularly vies with Intel for the title of the world’s largest manufacturer of electronic components, but its profit margins are the lowest among industry leaders. This explains the desire of Samsung’s management to move away from memory production towards the contract business.

Image Source: Maeil Business News Korea

It is worth recalling that Lee Jae-yong, Vice President of Samsung Electronics Lee Jae-yong, who runs the empire of his late father, is now facing a new criminal sentence, so the company’s business may suffer. Samsung Electronics Aims to Hold CAPEX at $ 30 Billion This Year, Beating Both Intel and TSMC. The bulk of funds will continue to go towards the memory chip business, although Samsung is hoping to become a major third-party contract manufacturer. NVIDIA, Qualcomm and Tesla are already Samsung customers in this area.

Samsung Electronics’ full quarterly report will be released on January 28, while Business Korea is trying to predict what key indicators will be presented to investors and shareholders. In the semiconductor segment, Samsung Electronics expects to generate 73 trillion won ($ 66.2 billion), and the operating profit will not exceed 19 trillion won ($ 17.2 billion). The operating profit margin of the company will be 26%.

At the Intel Corporation, this figure at the end of last year approached 30%, at TSMC it generally reached 42.3%. Lower profitability leaves Samsung with less of its own funds to develop and master new technologies. The indicator needs to be improved, otherwise Samsung will simply not be able to withstand the competitive race with increasing capital turnover.

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